Cities and shopping centers are apparently keen to attract shiny new Apple Stores to their areas. So keen, in fact, that Apple routinely gets special deals on leasing, taxes, and other incentives. Other retailers aren't jealous, however, because Apple Store customers add to the bottom line, according to The Next Web.

Among the deals Apple has received recently, The Next Web cites two prominent "sweet deals." One is the leasing deal Apple signed to move into New York's Grand Central Terminal. While New York State Comptroller Thomas DiNapoli thought the deal was too sweet in Apple's favor, the Metropolitan Transit Authority defended the deal, noting that Apple brought in more rent than any other tenant in the space would have. The deal also included $2.5 million in infrastructure improvements paid for by Apple, and is driving notable increases in revenue for nearby stores and restaurants in the terminal.

The other recent deal is one recently closed to bring a second Apple Store to Salt Lake City, Utah. While the details of the lease aren't public, the local ABC News affiliate reported that City Creek Mall offered the company five years of free rent to bring the store in. A commercial real estate broker in the area called the deal "unprecedented."

But in reality, it's not quite so unprecedented when it comes to Apple. For instance, Apple made a deal with the Chicago Transit Authority when it located its Lincoln Park store right next to a CTA subway stop that had grown decidedly dilapidated. In exchange for $4 million to renovate the stop, Apple received a free 10-year lease on the old, disused bus turn-around to build an open plaza just outside the store. The company also claimed first dibs on all advertising space inside the stop and potential naming rights for the station if and when the CTA implements its plan to sell those rights "for market value."

Other retailers located near Apple Stores aren't likely to complain about such deals, either. Apple Stores draw an average of 22,000 well-heeled customers per store, per week. And those shoppers like to spend money elsewhere, too. According to the co-owner of Michael Jordan's The Steakhouse restaurant, sales went up seven percent immediately following the opening of Apple's Grand Central store in New York.

So an Apple store, on average, will bring in 17x the tax revenue of any other business that could be located in the same spot. And that ignores the effect on other local businesses that the article pointed out.

Seems like a good deal for the most part. Way better (for example) than the deal Chicago gave the Park Grill.

I don't remember, has there been a company that's been able to name it's retail price like Apple? I'm not an Apple fan by any means but they're certainly a hot ticket and it's amazing just how much traffice is generated in their stores on a daily basis.

I think that cities, most of which are already strapped for cash, need to stop offering incentives for companies to set up shop there. Yeah, it sounds nice, allowing competition and all that, but the problem is that it's taking billions, maybe trillions, out of government coffers, and the end result is higher taxes on everyone else.

It's also grossly unfair to other companies for governments, whether city, county, state, or federal, to pick and choose who to give these sweetheart deals to. Sure, it rocks if you're Apple, but it sucks if you're Apple's competitor, or even some other business that would like to get such a deal on such primo space to set up shop.

Companies and governments like to pitch this as a net positive, but I still think they're not taking all of the hidden costs of supporting the infrastructure services needed for the additional people, space, and other overhead that these companies need.

If Apple wants the space, let them lease it just like any other company would. If they don't, let them find somewhere else to set up shop. It's not like Apple is exactly cash-strapped and can't afford it.

Who cares that it's Apple as long as deals are in the city's overall interest.

Basically, government incentives are fine, but they should always have clauses that the incentives won't go into play until certain threshholds are met that leave the city off better than they were. The end goal is to not have businesses keep moving off to the edge of the city with each new development and the city then needs to give incentives to redevelop where they were and now neither shopping center is earning them as much money as they were with just one shopping center.

In this case the $4 million + heavy sales taxes are better than having a parking lot. It makes sense.

In this case the $4 million + heavy sales taxes are better than having a parking lot. It makes sense.

It wasn't even a parking lot. That little triangle was a fugly piece of land 4 years ago. If anything it was bringing down the value of the neighboring parcels of land. Now those places will will be worth more and produce a higher share of property tax dollars.

And then there's my city, which when apple entertained the idea of gracing one of their key, progressive, downtown areas with a storefront, and the significant wealth of customers and other foot traffic it would have brought to the area, what did they do? Then said "no thanks."

Was it a traffic issue? nope, a mostly unused parking garrage is 1 block away, almost exclusively used at night by party-goers Pleanty of parking, and no issues with local traffic in that area either as it was overbuilt years ago for expected demand that never materialized.

Was it a crime issue? nope. That area is ALREADY patrolled actively by foot, bike, and car, one of the most overpatrioled areas in the city, and having an extremely low crime rate already, due to it;s proximity to a major university, and being a "party" district.

Was it a competition issue? nope, almost everything there is a resturant, bar, niche shop, or coffee house, every one of which would have benefitted from the extra traffic.

The issue they reasied: Architectural. They did not want an apple "landmark" taking away from the "aesthetic" of that area. OK folks, it was built about 20 years ago, is not exactly notable for itls looks as is, and apple offered not only to put in their store, but uplist the entire street's aesthetics.

No. They said no because Dell and the state have a long standing arrangement, and they didn't want apple encroaching on their teritory. Dell is the "exclusive" provider of laptops to university studetns, and this apple store would have been only 3 blocks from the main admissions building. Same reason NC got the apple plant instead of us, even though they picked us as a primary site rated above NC. Politics stopped us from getting an apple store, not costs, contruction, etc. Politics stopped us from getting a retail outlet that would have added hundreds of jobs (not just inside itself), and brought in significant tax revune. instead, students buy from apple online (since they get better prices that way) and our state gets no taxes from it.

Yeah, it sounds nice, allowing competition and all that, but the problem is that it's taking billions, maybe trillions, out of government coffers, and the end result is higher taxes on everyone else.

Uh no, that's not what happens. Apple may get a very good deal up front, but they return more in the long run via increased sales tax, and most likely higher paying jobs compared to other retailers. This isn't Walmart, where they come in, kill off local competition, and hire workers at such low pay that they have to be on public assistance.

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It's also grossly unfair to other companies for governments, whether city, county, state, or federal, to pick and choose who to give these sweetheart deals to.

So you'd rather the government lease it to a store that will bring in less money, draw fewer people, and have a much higher risk of going out of business? This benefts taxpayers how?

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Companies and governments like to pitch this as a net positive, but I still think they're not taking all of the hidden costs of supporting the infrastructure services needed for the additional people, space, and other overhead that these companies need.

Please explain how this costs more than any other retailer moving in there.

I think that cities, most of which are already strapped for cash, need to stop offering incentives for companies to set up shop there. Yeah, it sounds nice, allowing competition and all that, but the problem is that it's taking billions, maybe trillions, out of government coffers, and the end result is higher taxes on everyone else.

It's also grossly unfair to other companies for governments, whether city, county, state, or federal, to pick and choose who to give these sweetheart deals to. Sure, it rocks if you're Apple, but it sucks if you're Apple's competitor, or even some other business that would like to get such a deal on such primo space to set up shop.

Companies and governments like to pitch this as a net positive, but I still think they're not taking all of the hidden costs of supporting the infrastructure services needed for the additional people, space, and other overhead that these companies need.

If Apple wants the space, let them lease it just like any other company would. If they don't, let them find somewhere else to set up shop. It's not like Apple is exactly cash-strapped and can't afford it.

You seem to have grossly misunderstood the article. It isn't taking money away from the government, and it isn't unfair to other companies.

The entire point of the article was to highlight the benefits an Apple store brings to the government, in the form of taxes (or in one case a $4 million bus-stop renovation), and to other companies, in the form of increased customer traffic.

Who cares that it's Apple as long as deals are in the city's overall interest.

Basically, government incentives are fine, but they should always have clauses that the incentives won't go into play until certain threshholds are met that leave the city off better than they were. The end goal is to not have businesses keep moving off to the edge of the city with each new development and the city then needs to give incentives to redevelop where they were and now neither shopping center is earning them as much money as they were with just one shopping center.

In this case the $4 million + heavy sales taxes are better than having a parking lot. It makes sense.

they usually do have such clauses. They work on the idea that if targets are not met, back offered discounts have to be repaid in full, often with penalty on top. Dell paid out a massive fine itself recently to a state (I Think NC), for not meeting some of those goals in terms of staffing requirements. These deals by LAW have to be in the favor of the state to offer them. NC itself has come under federal review for offering deals that are a bit TOO sweet, questionably able to be met.

I don't remember, has there been a company that's been able to name it's retail price like Apple? I'm not an Apple fan by any means but they're certainly a hot ticket and it's amazing just how much traffice is generated in their stores on a daily basis.

Up here in Edmonton, Alberta, we enticed Dell to come to our city years ago. The city offered massive tax breaks and $1 lease on city owned land. Stipulation? Dell had to build the building, and if they didn't meet the criteria for the breaks, the city got to keep it. Economy heats up, Dell skips town, city sells the building for tens of millions.

These incentives can work, as long as your local government is smart enough to make sure they get something out of the deal.

It's the store, not the employees, that get the zero-cost lease, which is hardly zero cost. In many circumstances, such as the New York and Chicago deals discussed in the article, Apple invests money in improving the infrastructure and aesthetics of the area they are moving into. It probably isn't as much as what the rent would be over the times that are being discussed, but that does have some value for the cities involved and the neighbor tenants.

Crony capitalism at work yet again. One of the wealthiest corporations on the planet placing one of the most lucrative retail outlets around wants--no demands--all sorts of special breaks on rents and taxes. And, of course, that means that other businesses have to pay more or local community services will suffer.

It's a bit like billionaire Bono and his band, U2, pulling all sorts of tricks to reduce the taxes they pay, but haranguing governments and the rest of us to do more for the world's poor. And it's why the politics of the Superrich (particularly those in the Silicon Valley) tends to be a foul blend of liberalism (tax others) and libertarianism (don't tax me).

You'd think Tim Cook and the rest of Apple's executives would feel embarrassed by a flagrant greed that sucks money out of cities and towns and puts it into their own bank accounts.

Admittedly, tax monies often aren't the best way to improve a community. In many cases, it merely enables government unions to demand fat perks such as retirement at 55. But Apple could still show itself a responsible citizen. It could give the money it saves in rent and taxes to well-managed local non-profits.

Crony capitalism at work yet again. One of the wealthiest corporations on the planet placing one of the most lucrative retail outlets around wants--no demands--all sorts of special breaks on rents and taxes. And, of course, that means that other businesses have to pay more or local community services will suffer.

Did you read the article? Apparently not. City gets Urban blight removed - Free; City gets more in sales tax revenue from Apple than any one else that would be in that location, covering the cost of the "rent" that would have been paid had another retailer moved in. City gets increased tax revenue from neigbours. City gets some jobs that wouldnt have existed had the shopfront remained empty, City helps keep jobs in neighbours, and maybe employ a few more to meet increased demand. Win, Win, Win (Win, Win).

The only loser here, is um, well people who want to whinge about Apple I guess?

No. They said no because Dell and the state have a long standing arrangement, and they didn't want apple encroaching on their teritory. Dell is the "exclusive" provider of laptops to university studetns, and this apple store would have been only 3 blocks from the main admissions building. Same reason NC got the apple plant instead of us, even though they picked us as a primary site rated above NC. Politics stopped us from getting an apple store, not costs, contruction, etc. Politics stopped us from getting a retail outlet that would have added hundreds of jobs (not just inside itself), and brought in significant tax revune. instead, students buy from apple online (since they get better prices that way) and our state gets no taxes from it.

On its face, this sounds only slightly more believable than "911 was an inside job".

What state do you live in? Maybe I'm out of line and Dell has a lot of political influence, but it sounds fishy. My school had HP everything, most schools/organizations pick a provider and use them as their one-stop solution for as many needs as possible to maximize volume discounts. Most schools also price out the competition at regular intervals to see if they can get a better deal (Colorado State University was all Dell not too long ago and switched to HP).

Apple holds ~10% of the laptop/desktop market, and offers pretty much nothing in terms of enterprise solutions, making the conspiracy angle hard to believe.

I'm not anti-Apple so much as anti-Apple fanboys (all fanboys are annoying, Apple ones just doubly so in my experience), so I'd be happy to avoid an Apple store in my area.

It's crazy. There's an Apple store at the mall by my house. Even on a quiet day with barely anyone in the mall, that store's still packed with people. (And I imagine that foot traffic TO the Apple store does benefit the stores around it) The draw that brand has is downright mind-boggling!

Crony capitalism at work yet again. One of the wealthiest corporations on the planet placing one of the most lucrative retail outlets around wants--no demands--all sorts of special breaks on rents and taxes. And, of course, that means that other businesses have to pay more or local community services will suffer.

Meanwhile in rural developing areas, the nearby municipalities gerrymander their borders to include highway corridors where commercial development is taking place. Now the stores built there are included in the city's sales tax envelope their neighbors don't have to access to city services.Cities are going to work creatively within their rules to expand their tax income. It's not crony capitalism, it's enlightened self interest.

The only loser here, is um, well people who want to whinge about Apple I guess?

Are you kidding? Look at how something like this encourages people to whine about Apple! They've thought of everything: Good location for a store to sell their products, increased jobs, more sales tax collection, cleaning up urban blight, AND providing something for other people to whine about!

It's crazy. There's an Apple store at the mall by my house. Even on a quiet day with barely anyone in the mall, that store's still packed with people. (And I imagine that foot traffic TO the Apple store does benefit the stores around it) The draw that brand has is downright mind-boggling!

Kind of the opposite around here. The few times I've been down that way, it's no surprise people get great service... like 50 employees and 5 customers. I go in and they annoy the crap out of me... following me around and stuff.

This isn't anything new, but I suppose it's a story because it's Apple. Apple plans on opening lots of stores, and they have paid quite a bit to get into key areas. But this is about people enticing Apple to open stores in their area or in their specific space. Without incentives, Apple may pay full price or more, but perhaps in a different neighborhood or shopping area. Smaller, less known businesses benefit from having Apple as their neighbor. I suppose the question would be who is doing the soliciting? Is Apple being approached with offers, or are they the ones making the request? If you were opening a retail business or restaurant, would you want to be near an established brand that draws lots of potential customers, or locate elsewhere?

And here the RIAA/MPAA has been saying giving away stuff for free is bad business. Not only are these people giving away real physical stuff that is worth A LOT of money, but digital stuff is fake property that has almost zero worth.

I've seen deals go south before. A "less desirable" part of town gets "bought out" by eminent domain (where the land is condemned by the city and purchased at a big discount). Then, after the lots are cleared, the big tenant walks out (often through getting offered a better deal elsewhere). Now all people get is an eyesore.

I drive by such a scenario everyday. A city bought out an entire block of about 30 homes and demoed them for a shopping center. The retailer bailed, and now the city has a large ugly lot with a "zoned commercial" for sale sign. The city is worse off because not only is that part of town ugly (a prominent entrance, no less), but they actually LOST revenue by evicting its residents, AND they get to deal with the fallout from its remaining citizens.

I know that here in Australia state gov'ts often waive payroll tax to entice large businesses to set up shop. I used to work in an airline that was putting in new call centres, and the states pretty much all offered to waive payroll tax, help with building the site, etc.

Gov'ts know that the loss in corporate taxes (or other incentives) is more than made up for by the increased taxes from the staff and customers.

Anyone decrying this as a bad thing really needs to look into how gov'ts entice businesses to set up. It's good practice.

I am absolutely DISGUSTED that municipalities would throw money at a company with over 600 BILLION DOLLARS in the bank! Let Apple pay their own rent...hell, charge them double for being such total scum! (why scum? Let me know what they plan on doing with that 600 BILLION and if it positively affects humanity!) The fact that this horrible company gets everything they want with NO ONE standing up and telling them to pay their fair share just sickens me! BOYCOTT APPLE!

I think that cities, most of which are already strapped for cash, need to stop offering incentives for companies to set up shop there. Yeah, it sounds nice, allowing competition and all that, but the problem is that it's taking billions, maybe trillions, out of government coffers, and the end result is higher taxes on everyone else.

No. Apple stores have significantly higher traffic than any other store, their sales are much higher and therefore the amount of tax they're paying is much higher.

Also, people who go to that store tend to purchase things nearby if at all possible. This increases the sales of those stores, and also their tax payments.

KingSkippus wrote:

It's also grossly unfair to other companies for governments, whether city, county, state, or federal, to pick and choose who to give these sweetheart deals to.

It's not unfair if it increases sales for every shop near an apple store, which it does do according to the data.

KingSkippus wrote:

Companies and governments like to pitch this as a net positive, but I still think they're not taking all of the hidden costs of supporting the infrastructure services needed for the additional people, space, and other overhead that these companies need.

There are no "hidden costs", there are "hidden profits". And they're not hidden to people in the industry.

KingSkippus wrote:

If Apple wants the space, let them lease it just like any other company would. If they don't, let them find somewhere else to set up shop.

That is exactly the point. It takes months of planning to open a new store, there is a limit to how many stores they can open each year - they're opening new stores as fast as they possibly can. Deals like this one allow a city to be shortlisted, so instead of opening a store in three years time, they'll open one this year.

Without deals like this Apple *will* take their business elsewhere, and the local economy suffers for it.

I am absolutely DISGUSTED that municipalities would throw money at a company with over 600 BILLION DOLLARS in the bank! Let Apple pay their own rent...hell, charge them double for being such total scum! (why scum? Let me know what they plan on doing with that 600 BILLION and if it positively affects humanity!) The fact that this horrible company gets everything they want with NO ONE standing up and telling them to pay their fair share just sickens me! BOYCOTT APPLE!

So a city/municipality offers a deal that Apple takes advantage of, and now Apple is evil and we should boycott it?

Apple does not have $600 billion lying around. That is market cap, not cash on hand.

I am absolutely DISGUSTED that municipalities would throw money at a company with over 600 BILLION DOLLARS in the bank! Let Apple pay their own rent...hell, charge them double for being such total scum! (why scum? Let me know what they plan on doing with that 600 BILLION and if it positively affects humanity!) The fact that this horrible company gets everything they want with NO ONE standing up and telling them to pay their fair share just sickens me! BOYCOTT APPLE!

Wow, way to construct a valid and thoughtful post on this article.

I am by no means an Apple fanboi. In fact, I avoid Apple products as much as possible. But damn, mate. Don't be so ridiculous. If Apple declined to accept this awesome offer of no rent etc, they would literally be pouring money down the drain. Don't you know how business works? As so many people have stated throughout the comment section: Apple will bring in a lot of revenue for surrounding stores etc. And they would add a lot of value to the land. WHO is losing here?